UKLPG welcomes the opportunity to respond to the
Transport Select Committee's inquiry into Transport and the Economy.
UKLPG is the trade body for the Liquefied Petroleum Gas (LPG)
industry and represents all the major LPG supply companies, LPG
conversion equipment suppliers and vehicle converters in the UK.

While the Select Committee's inquiry is primarily
focusing on areas of major public spending such as reducing congestion
in urban areas, key inter-urban corridors and international gateways
(major ports and airports), this response outlines the LPG industry's
importance to the UK economy as a clean, green component of the
transport fuel mix.

We would be happy to discuss any of the issues raised
in this response and in the inquiry with the Select Committee.

1. EXECUTIVE
SUMMARY

1.1. We estimate that that LPG autogas industry
is worth over £150 million to the UK economy.

1.2. In recent consultation submissions, UKLPG
has called on Transport for London (TfL) to retain its Alternative
Fuel Discount, or if replaced by a Greener Vehicle Discount, that
it be based on ambitious targets for life cycle C02,
and exhaust NOx and PM emissions. The mechanism for
this discount would take into account retrofitted solutions such
as LPG autogas. UKLPG is also campaigning for a long term commitment
from the Treasury on the fuel duty differential between LPG, petrol
and diesel.

1.3. As a proven and established technology that
can be applied to existing vehicles, LPG autogas can deliver reductions
in NOx and PM levels quickly and cheaply.

1.4. LPG autogas is an innovative, low cost and
low carbon technology with a fully established national conversion
and refuelling network - a network created by the private sector,
with no cost to Government. The infrastructure is in place to
provide LPG capability and consequent emissions reductions to
the 20 million-plus petrol vehicles currently on our roads and
the 60% of new cars which are fuelled by petrol.

2. ABOUT UKLPG

2.1. UKLPG is the trade body for the Liquefied
Petroleum Gas (LPG) industry and represents all the major LPG
supply companies, LPG conversion equipment suppliers and vehicle
converters in the UK.

2.2. This document has been produced by the UKLPG
autogas group, and focuses on the relationship between LPG as
a transport fuel and the UK economy.

2.3. Member companies cover over 95% of the total
LPG sales in the UK, around 80% of autogas equipment sales and
the participants in the LPGA Approved Installer Scheme account
for around 70% of vehicle conversions.

2.4. LPG autogas, also known as propane, is a
readily available, low carbon alternative fuel. There are over
160,000 LPG vehicles in the UK, served by over 1,400 refuelling
sites and a national network of vehicle installers, representing
a £50 million investment from the LPG industry.

2.5. The refuelling infrastructure for LPG was
rolled out without the need for Government subsidy, reflecting
the commitment of the LPG industry to the UK market. Refuelling
infrastructures for other alternative fuels such as electricity
or hydrogen will require significant Government investment.

2.6. There has been significant international
take up of LPG autogas, most notably where support was available
from governments. In Germany, for example, the government announced
in 2006 that fuel duty on LPG would be fixed to 2018. The market
is now growing to over 100,000 conversions per annum. Vehicle
manufacturers are now producing factory fitted LPG options for
the market.

2.7. As conventional engine efficiency increases,
there are some who argue that LPG has less of a role to play as
its emissions benefits are eclipsed by conventional fuels. UKLPG
stresses that the most up-to date emissions data continues to
show that LPG creates significantly lower emissions than the newest
Euro V and VI rated petrol and diesel vehicles.

2.9. Lifecycle (well to wheel) analysis demonstrates
that an LPG autogas fuelled vehicle generates 14% and 10% lower
CO2 emissions than its petrol and diesel run equivalents
respectively. Exact emissions vary between vehicles, but the vast
majority of cars in the existing parc would have their exhaust
CO2 emissions improved.

3. FUEL DUTY

3.1. Consumer take up of LPG autogas is motivated
by a combination of a desire to reduce CO2, NOx
and PM emissions, and a desire to save money. As LPG autogas is
sold more cheaply than petrol or diesel, the cost of converting
a car can be recouped over time through savings at the pump.

3.2. This difference in price is a result of
the different rates of fuel duty charged on the different fuels.
Consumers, including individual passenger car drivers and commercial
light fleet managers considering investment in LPG conversion
require certainty that they will have a return on their investment.
This requires a knowledge that the duty differential will remain
in place for the duration of the "payback cycle" of
the initial investment.

3.3. The duty differential is a proven policy
measure that delivers emissions reductions with no direct impact
on public spending. The increased duty burden on petrol and diesel
users is consistent with the "polluter pays" principle.

3.4. Germany is an example of a country where
a 12 year commitment on the fuel duty differential for LPG led
to wide uptake, with over 100,000 conversions per annum and factory-fitted
models in production.

4. CONGESTION
CHARGING

4.1. The Eddington Transport Study recommended
that the government "get prices right" across all modes
of transport - "especially congestion pricing on the roads
and environmental pricing across all modes; to make best use of
existing networks."

4.2. UKLPG has responded to the Transport for
London (TfL) consultation on the proposed changes to the Congestion
Charge, highlighting the need for LPG autogas vehicles to benefit
from discount to congestion charges, therefore incentivising drivers,
including owners of older cars who are not prepared to purchase
a new model, to reduce their emissions.

4.3. UKLPG have called for the Alternative Fuel
Discount (AFD) to be retained and has called on TfL not to "pick
winners" by designing mechanisms that will disproportionally
benefit certain technologies above others.

4.4. There are numerous examples from around
the world, such as Asia, where LPG works well with electric vehicles,
providing back up power for when batteries run out. Hybrid solutions
like these demonstrate that LPG is an established and proven solution
that could help to provide a stepping stone in the roll out of
electric cars as part of the energy mix.

4.5. UKLPG believes that congestion charging
can play a key part in meeting objectives on air quality and carbon
emissions. UKLPG calls for this approach to be rolled out to other
inner-city locations, and to be extended to feature as an aspect
of any recommendations on road pricing.

5. ENVIRONMENTAL
ISSUES

5.1. The Eddington Transport Study highlights
the need for any transport policy to respond to the challenges
of climate change; both environmental and economical. Via its
recommendations to the Transport for London Congestion Charge
consultation and the Mayor's Air Quality Strategy, UKLPG has highlighted
the industry work on environmental issues and the need for investment
in the industry to help assist government policy in lowering pollution.

5.2. LPG autogas is a popular, clean and green
fuel with the potential to help meet the government's policy objectives
on both clean air and CO2 emissions.

5.3. UKLPG believes that TfL and the government
should impose more ambitious targets for air quality than those
proposed, harnessing the potential of solutions like LPG autogas.

5.4. UKLPG expect significant growth in the use
of Light Commercial Vehicles (LCV) as the economy recovers from
recession. LPG is a popular fuel in the LCV sector, where it achieves
significant emissions reductions and cost savings. LCVs running
on traditional diesel are heavy emitters.

5.5. Growth in the LCV sector is crucial to London's
economic recovery, with large and small central London businesses
relying on LCVs for supply chain, freight and services, but should
be on a sustainable basis. UKLPG would welcome support for LCV
fleet operators looking to convert to LPG, through national or
regional incentive schemes.

5.6. LPG is a clean fuel, exceeding the highest
performing combinations of conventional fuels and new vehicles
in terms of air quality. Proposed Euro VI limits for diesel commercial
vehicles are 0.08 gm/km NOx and 0.005 gm/km PM, a moderate
improvement on current Euro 5 standards of 0.18 gm/km NOx,
and 0.005 gm/km PM. Average emissions for LPG, according to 2003
EDC Type 1 European Emissions Testing Programme tests, were 0.018
gm/km NOx, with PM levels too low to measure.

5.7. Increased uptake of LPG autogas in London,
as an example of an urban area with numerous LPG auto gas filling
stations, could make significant contributions to meeting the
Mayor's targets outlined in his Draft Air Quality Strategy.

5.8. Vehicles running on LPG are estimated to
reduce noise pollution by 50% when compared with diesel.

5.9. Lifecycle (well to wheel) analysis demonstrates
that an LPG autogas fuelled vehicle generates 14% and 10% lower
CO2 emissions than its petrol and diesel run equivalents
respectively. Exact emissions vary between vehicles, but the vast
majority of cars in the existing parc would have their exhaust
CO2 emissions improved.

UKLPG believes that the Government and regional authorities
should impose more ambitious targets for clean air than those
proposed, harnessing the potential of solutions like LPG autogas.
Measures designed to improve emissions should focus on the existing
vehicle parc as well as new cars.

6. CONCLUSION

UKLPG has taken the opportunity in this paper to
respond to The Transport Committee's inquiry into Transport and
the Economy.

UKLPG has made the case for a long term commitment
to the fuel duty differential between LPG, petrol and diesel,
in order to encourage consumers to choose the cleaner, greener
option.

UKLPG has highlighted its recent submissions
to Transport for London and the Mayor of London on the role of
LPG in London. UKLPG calls for clean fuels to be incentivised
in any future road pricing scheme.

UKLPG has highlighted the role of LPG as part
of the transport fuel mix, and has called for a policy infrastructure
that enables consumers to realise the full extent of LPG's clean,
green benefits.

UKLPG are happy to discuss the content of this document,
or any other issue pertinent to LPG autogas with the Select Committee.